US-Korean Free Trade Agreement Negotiations Reach Crucial Point

By James A. Morrissey, Washington Correspondent

US and Korean government officials
are pressing to reach a consensus on a free trade agreement (FTA) by the end of this month in order
to get it through Congress before the president’s trade promotion authority (TPA) expires June 30.
While the administration is seeking an extension of TPA, it is anything but a given, and without
TPA, the Korean agreement and several others being proposed would be in serious trouble.

US and Korean trade negotiators concluded a round of talks in Washington this week and have
scheduled what they hope will be a concluding round in Seoul next week. However, the proposed
agreement faces several hurdles in both countries. South Korean farmers are opposed to lowering
tariffs, and US manufacturers — particularly automobile manufacturers — are pressing for greater
market access in exchange for any US tariff reductions. US textile manufacturers and their
supporters in Congress are concerned about a surge in imports that could result from the FTA. They
are pressing for textile provisions with a strict yarn forward rule of origin without any tariff
preference level that would permit a given amount of inputs from nonparticipating countries such as
China; strict Customs enforcement to prevent transshipments; an effective safeguard mechanism to
address surges, and a long-term gradual phasing out of tariffs — as long as 10 years in some cases.

Two of the textile industry’s strongest supporters, Reps. Howard Coble, R-N.C., and John
Spratt, D-S.C., have written to US Trade Representative Susan C. Schwab expressing their concern
that a TPA with South Korea “will simply be a one-way street, with a massive flow of Korean
textiles, apparel and home furnishings into the United States and no opportunities for US products
to be exported to Korea.” They endorsed the US textile industry’s positions with respect to a rule
of origin, Customs enforcement, a safeguard mechanism and a lengthy phase-out of tariffs.

Textile manufacturers do not see any upside to the TPA, as South Korea with its robust
textile industry already has a $178 million surplus in textiles and apparel trade. Importers, on
the other hand, want an agreement with a minimum of restrictions in order to provide them with
flexibility in their apparel sourcing.March 20, 2007